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Federal Trade Commission v. Staples, Inc.

United States District Court, District of Columbia

February 28, 2017

FEDERAL TRADE COMMISSION, COMMONWEALTH OF PENNSYVANIA, AND THE DISTRICT OF COLUMBIA, Plaintiffs,
v.
STAPLES, INC. and OFFICE DEPOT, INC. Defendants.

          MEMORANDUM OPINION

          Emmet G. Sullivan United States District Judge

         Pending before the Court is the motion of the Commonwealth of Pennsylvania and the District of Columbia (hereinafter “Moving Plaintiffs”) for attorneys' fees and costs under Section 16 of the Clayton Act. ECF No. 457. Upon consideration of the parties' submissions, the governing statutory and case law, and for the following reasons, Moving Plaintiffs' motion is DENIED.

         I. BACKGROUND

         On February 4, 2015, Staples and Office Depot entered into an agreement under which Staples would acquire Office Depot. On December 7, 2015, Moving Plaintiffs joined Co-Plaintiff Federal Trade Commission (“FTC”) to bring suit to enjoin the merger. Pls.' Mot. Prelim. Inj., ECF No. 5. On May 10, 2016, this Court determined that there was a reasonable probability that the proposed merger would substantially impair competition and granted Plaintiffs' motion for a preliminary injunction under Section 13(b) of the Federal Trade Commission Act, 15 U.S.C. §53(b) (“FTC Act”). See Fed. Trade Comm'n v. Staples, Inc., 190 F.Supp.3d 100 (D.D.C. 2016). After the Court's ruling, Office Depot and Staples abandoned the merger. Although the FTC is also a plaintiff in this case, only Moving Plaintiffs seek attorneys' costs and fees in the combined amount of $176, 095.44.

         II. LEGAL FRAMEWORK

         A. Section 16 of the Clayton Act

         In 1941, Congress passed the Clayton Act to address provisions not covered by the Sherman Act, such as mergers and acquisitions. See 15 U.S.C. §§ 12-27. In 1976, Congress amended Section 16 of the Clayton Act, to provide that “[i]n any action under this section in which the plaintiff substantially prevails, the court shall award the cost of suit, including a reasonable attorney's fee, to such plaintiff.” Hart-Scott-Rodino Antitrust Improvements Act of 1976, Pub. L. No. 94-435, Title III, § 302 (3), 90 Stat. 1383, 1396 (codified as amended at 15 U.S.C. § 26 (1998)). The party seeking attorneys' fees “bears the burden of establishing entitlement to an award and documenting the appropriate hours expended and hourly rates.” Hensley v. Eckerhart, 461 U.S. 424, 437 (1983).

         B. Section 13(b) of the FTC Act

         The FTC Act expanded the scope of illegal activities in restraint of trade and provided a path for FTC enforcement of antitrust laws. See 15 U.S.C. §§ 41-58. Section 13(b) of the Act empowers the FTC to seek a temporary restraining order or preliminary injunction in a federal district court if the Commission believes “any person, partnership, or corporation is violating, or is about to violate, any provision of law enforced by the Federal Trade Commission.” 15 U.S.C. § 53(b). Unlike the Clayton Act, the FTC Act does not grant attorneys' fees to prevailing plaintiffs. See generally id.

         III. DISCUSSION

         The parties disagree on two principal issues: (1) whether Moving Plaintiffs are entitled to attorneys' fees and reasonable costs; and (2) if so, whether the calculated amounts that Moving Plaintiffs have presented to the Court are reasonable.

         Moving Plaintiffs rest their argument for attorney's fees and costs on the theory that this Court's entry of the preliminary injunction that halted the Staples and Office Depot merger established that the Plaintiffs “substantially prevailed in this litigation” under Section 16 of the Clayton Act. Pls.' Mot., ECF No. 457 at 5. Moving Plaintiffs assert that the preliminary injunction “is the functional equivalent of a final judgment in this matter” because the Plaintiffs achieved the relief they ultimately sought -- i.e., nonconsummation of the Staples and Office Depot transaction. Id. at 4. Moving Plaintiffs further claim that the attorneys' fees and costs they seek are reasonable in nature. See id. at 6-7.

         Defendants contend that Moving Plaintiffs are not entitled to any fees and costs, characterizing the relief Moving Plaintiffs seek as an “unprecedented windfall.” Defs.' Opp'n, ECF No. 470 at 1. Highlighting the fact that this case was never litigated under Section 16 of the Clayton Act, Defendants argue that Moving Plaintiffs are not entitled to any shifting costs or fees “as a matter of law because they did not litigate, much less substantially prevail, under the more demanding Section 16 standard.” Id. Instead, according to Defendants, the parties only litigated, and the Court only granted, relief relating to the FTC's claim for a preliminary injunction under the standard set forth in Section 13(b) of the FTC Act. Id. at 2. Defendants further contend that even if the Court assumed that Moving Plaintiffs were entitled to attorneys' fees and costs under Section 16 of the Clayton Act, Moving Plaintiffs' calculation is unreasonable and excessive. In response, Moving Plaintiffs argue that they have satisfied the four-part preliminary injunction standard set forth in Section 16 of the Clayton Act and maintain that their calculated fees are reasonable. Pls.' Reply, ECF No. 471 at 4-14.

         As an initial matter, the Court need not examine whether the costs presented by Moving Plaintiffs are reasonable because the Court finds that Moving Plaintiffs are not entitled to attorneys' fees and costs as a matter of law. Section 16 of the Clayton Act provides for attorneys' fees and costs “[i]n any action under this section in which the plaintiff substantially prevails[.]” 15 U.S.C. § 26 (emphasis added). Plaintiffs insist that the term “prevail” is not restricted to final judgments. Pls.' Mot., ECF No. 457 at 3. While this may be correct, see Mahr v. Gagne, 448 U.S. 122, 129 (1980), Moving Plaintiffs ignore the remaining text of Section 16. Here, Moving Plaintiffs did not prevail, much less “substantially prevail, ” under the Clayton Act. Instead, this Court granted Plaintiffs' request for a preliminary injunction under Section 13(b) of the FTC Act. Staples, 190 F.Supp.3d at 114 n.7 (distinguishing the Section 13(b) standard from the traditional preliminary ...


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